Open minds draft Open Prairies proposal

November 1, 2006

WINNIPEG, Man. - With the European Union establishing a functional cabotage arrangement, the time is right for Canada and the US to follow suit and allow for the free movement of loads between points ...

November 1, 2006
by
James Menzies

Categories

WINNIPEG, Man. – With the European Union establishing a functional cabotage arrangement, the time is right for Canada and the US to follow suit and allow for the free movement of loads between points in both countries, regardless of where the trucks are plated.

That’s the opinion of a group of trucking industry and trade observers who have penned an interesting report on the subject, called the Open Prairies proposal. Bob Dolyniuk, general manager of the Manitoba Trucking Association, Barry Prentice, professor at the University of Manitoba Transportation Institute and Richard Beilock, professor at the University of Florida, jointly developed the idea after a casual discussion at a conference nearly two years ago.

The further they explored the benefits of allowing cabotage within Canada and the US, the more excited they grew about the idea.

“It started as an offhand idea, but the more I thought about it, the more I realized it was both feasible and probably the best way to nudge North America toward the kind of system it must eventually have,” Beilock tells Truck News. He feels North America will eventually have no choice but to embrace cabotage, if it wishes to remain competitive globally, and Prentice agrees.

“It seems incongruous to me that we have the free movement of goods but not in the trade of transportation services that are necessary to complete our continental exchanges,” Prentice says. “If North America wishes to maintain its competitiveness with Europe, then we have to accept free trade of transportation services.”

Together, the trio of Beilock, Prentice and Dolyniuk are poised to bring the idea to government and industry, albeit on a small scale – for starters anyway. The Open Prairies proposal calls for cabotage to be permitted within the three Canadian Prairie provinces as well as several Upper Great Plains states (North Dakota, South Dakota, Montana and Idaho). More regions can be added or subtracted from the experiment, if necessary.

If the proposal gets the green light, Canadian trucks would be able to transport goods from point-to-point in the US and vice-versa, thus reducing empty miles, lowering freight rates and improving truck utilization. Ultimately, consumers would benefit from lower shelf prices, proponents insist.

The Prairie provinces and neighhouring US states were chosen for this experiment, because according to Prentice, “The distances are long, the market is relatively thin, and no one makes money running empty. Certainly from a market perspective, there is not an obvious north-south advantage.”

According to a position paper, permitting cabotage will allow for the greater use of triangulation – routes with three or more legs which allow for more loaded – and profitable – miles. An example of this is a run from Winnipeg-Chicago-Toronto, with the carrier able to charge fronthaul rates for each of the three legs.

Currently, for Canadian carriers, the base of that triangle has to be north of the border. Unfortunately, cabotage precludes a Canadian carrier from taking advantage of triangulation with the base of the triangle in the US – a Winnipeg-Chicago-Fargo, ND run, for instance.

“Triangulation helps truckers make the best use of their assets for their own sakes, society’s and the environment,” the proposal points out. “Restrictions against cabotage limit triangulation.”

Proponents of the Open Prairies proposal admit they have their work cut out for them in seeing this project through to fruition. For starters, numerous governments and industry stakeholders on both sides of the border (including Customs and Immigration agencies) will have to be sold on the idea.

“Personally, I believe there is more support for this than against it,” Prentice says. “It’s a low-risk opportunity for everyone to get started. I believe that the experiment has a very good chance of being tested, but don’t ask me when. This is the unknown that will depend on events and the emergence of voice beyond the ivory-covered walls of academe.”

Prentice is confident the concept will gain government support, provided a minimal amount of capital is required. Also, a sunset clause will be required, making it easy to revert back to normal if the plan does not yield any benefits.

“We feel that the fear of the unknown is too great for politicians and interest groups to overcome in proposals for wholesale changes of regulations,” Prentice says. “Hence the idea of a controlled experiment that is reversible, but large enough to measure whether the impacts are positive or negative. Once the results are in, everyone can decide whether to take the next step or return to the status quo.”

To read the entire proposal and to provide feedback, visit www.trucknews.com and click on the button that says “Open Prairies Proposal.”